What are consensus estimates? And why are they important? Well, a consensus estimate is an estimate of a company's performance based on many analysts estimates aggregated together. Analysts use their expertise to estimate a company's future performance.

What we're really saying here is that we want to use the expertise of all of these outsiders who've spent lots of time pouring over the company's numbers and then we want to find a kind of average of those numbers. Let's have a look at an example. Here, we've got the consensus estimates for a company. You can see we've got the actual figures for December 20 and 21, but then in the next column, we can see we've got March 22 E and E means an estimated figure. We can see we've got four quarters for 22 and then we've got the full-year for 22, then four quarters for 23 plus the full-year for 23, and then lastly, a full-year for 24. That gives us three years worth of estimates. On screen, we're given sales and cost of sales and gross income et cetera, but a wide range of figures are available. First of all, for the three financial statements but also important numbers such as EPS, earnings per share, dividends, ratios such as debt to equity, multiples such as price, the book, and many, many others. This is super useful for modelers, investors, traders, and many others. People who don't have the time to really investigate a company's numbers enough, they decide, "Do you know what, I'll leave it to some outsiders, some experts who spend all their time doing this and I'll rely on the consensus of those." Alternatively, if we have access to company management, we can ask for their estimates of future performance. Now, we need to be a little bit careful here. We're not talking about insider trading, but if a company was looking to sell itself and it was working with a bank who were giving them advice on how to be sold, management might give their estimates of the future company performance to the bank, so the bank can come up with a good valuation.